Yahoo: 80% Chance It Gets Acquired, Analyst Says

Stifel Nicolaus analyst Jordan Rohan has boosted his rating on Yahoo to Buy from Hold, setting an $18 price target, to reflect his view that there is now an 80% chance that the company is acquired. He contends that erosion of the company's fundamentals, along with pressure from activist holders, "has prioritized the outright sale of the company over the option to remain independent."

Rohan contends that when it comes to Yahoo's fundamentals, "at some level, bad means good (for YHOO shareholders), as faltering fundamentals weaken the case that Yahoo should remain independent."

The analyst notes that both private equity firms and strategic buyers are evaluating Yahoo. He adds that Microsoft can play kingmaker here, given its pivotal role as the provider of search services on the site. Rohan also notes that he continues to value the company's stake in Alibaba Group at $35 billion, or about $10 a share - or about $7 a share net of tax. He adds that "to a strategic acquirer like Microsoft, it is possible that securing a significant minority stake in Alibaba would be worth even more than we have modeled."